Sydney Homes Appreciated A$120,000 on Average Last Year

Australia’s capital cities combined saw 10.9% price growth in 2016

Sydney homeowners saw their home values gain on average A$10,000 (US$7,220) a month, or A$120,000 (US$86,660) over the course of last year, according to a report released Tuesday.

Median home values in Sydney, the largest and most populous city in Australia, rose 15.5% from 2015 to A$852,000 (US$615,293), almost doubling what it was in January 2009, according to CoreLogic Home Value Index for December and the entire year of 2016.

“Sydneysiders saw dwelling values increase by approximately A$10,000 per month over the past year, creating a significant boost in wealth for homeowners,” said Tim Lawless, research director at CoreLogic, the largest property service provider in Australia and New Zealand.

Led by Sydney, residential values in all capital cities increased 10.9% in 2016, the country’s highest annual growth rate since 2009, according to CoreLogic. The median price of capital cities combined was A$615,000 (US$444,000).

Melbourne’s residential market also had a strong 2016. Home values rose 13.7% year-over-year to A$641,200 (US$463,059). Since January 2009, Melbourne’s home values have increased 83.5%.

Hobart, the capital city of the island state Tasmania, also recorded double-digit price growth in 2016.

Single-family homes saw more value appreciation than apartments. Over the last 12 months, house values in the capital cities rose 11.6%, compared with a 5.9% increase for apartment units.

In Melbourne, house values grew 15.1% year-over-year while unit values only rose 1.7%. Brisbane’s house values increased 4.0% over the last year; unit values, on the other hand, dropped 0.2%.

“The divergence in growth rates is the most distinct in Melbourne and Brisbane, where concerns around unit oversupply have eroded buyer confidence,” Mr. Lawless said.

There were approximately 465,500 home sales in the capital cities in 2016, 8.7% lower than a year ago and 3.8% lower than the 10-year average, according to CoreLogic estimates.

“Lower sales aren’t necessarily due to lower housing demand. In most markets, the slowdown in turnover is more attributable to a shortage of stock available for sale rather than a lack of buyer demand,” Mr. Lawless said.

Mr. Lawless predicted that the housing market in 2017 will likely face some headwinds, including a potentially higher interest rate, oversupply of apartment buildings and government policies to curb property investment. These factors could result in a more subdued price growth in capital cities.